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The
7-Up
Project is
well into its second phase now. The first phase culmination meeting,
held in Goa, India on 7-8 September gave a significant boost to the
progress of the project. On one hand we decided to have another round
of national reference group (NRG) meetings in all the project
countries and on the other, we decided to have two mid-term review
meetings which were not planned initially. The second NRG meetings are
already over in most of the countries, while for two, the preparations
are on. In the meanwhile the country researchers were busy revising
their reports, once on the basis of the comments received from the Goa
meeting and then on the basis of comments from the second NRG
meetings. A review meeting of the partners and the advisers was
organised in Geneva in October, which helped us in taking a stock of
the progress made since Goa meeting and also to take certain important
decisions for moving further. Another mid-term review meeting is
slated to be held in December at Jaipur, India.
The
intervening period also witnessed a spurt in the debate and discussion
on competition policy in several international fora, especially with
reference to a multilateral competition policy. To be specific, the
issue was discussed at length in the following events:
-
International
symposium on ‘Competition Policy and Consumer Interest’
organised by CUTS with the support of IDRC (International
Development Research Centre) in Geneva on 12-13 October and
attended by representatives of consumer organisations across the
world as well as from the missions to WTO in Geneva;
-
the
OECD global forum on competition policy held at Paris on 16-17
October;
-
the
UNCTAD Expert Group Meeting on ‘Consumer Interest, Competition,
Competitiveness and Development’ held at Geneva on 17–19
October; and
-
the
Panel Discussion on Trade and Competition Policy organised by CUTS
and CI (Consumers International) at Doha on 12th
November.
In
all these events, concerns were expressed on the growing cross-border
anti-competitive practices, in tandem with the speed of globalisation
over the last few years. The news of a hefty fine imposed by the
European Commission on eight pharmaceutical companies for an
international price-fixing conspiracy on vitamins, is just a reminder.
Anyway, in all these events, it was recognised that there is an urgent
need for an international framework for competition policy as the
competition challenges posed by the ensuing globalisation, are hard
enough to be tackled by any single country unilaterally. However,
experts are divided on whether, such a multilateral framework should
be put in place within the ambit of the WTO or some other forum or a
completely new forum!
Nevertheless,
the WTO is moving ahead alongwith its agenda on competition. The
Ministerial Declaration made at Doha agreed to launch negotiations for
a competition agreement after the fifth ministerial. There are
definitely pros and cons of everything and we can debate for years as
to what should be the appropriate forum for a multilateral competition
policy, while the big corporations will continue to exploit the
smaller economies and hapless consumers. Going by the experience of
past several decades on the issue, it will be extremely difficult to
have a multilateral arrangement on competition in any other existing
forum or a completely new forum. Neither any serious attempt is being
made in this regard elsewhere, except in the WTO. The spirit of
binding commitment within the WTO will make such agreement more
effective than a freestanding one or within some other forum.
Moreover, it is likely to bring some balance in the WTO approach,
which is heavily biased in favour of producers, especially the
TNCs and does address the consumer concerns appropriately. Considering
these, having a multilateral competition arrangement within WTO
framework may not be a bad idea after all!
Happy
reading!
The
7-Up Team at CUTS
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The
months of September and October marked the beginning of Phase-II of
the 7-Up Project, as it is popularly known. The project entitled
“Comparative Study of Competition Regimes in Select Developing
Countries of the Commonwealth” is being implemented by CUTS, Jaipur
with the support of DFID, UK. The countries selected for the study are
India, Pakistan, Sri Lanka, Kenya, South Africa, Tanzania and Zambia.
During
these two months, preliminary activities relating to Phase-II of the
Project were completed and efforts were made to review some activities
of Phase-I of the Project for an even better output. Some foundation,
for structuring Phase II, was laid at the Phase-I culmination meeting
of the Project that was held in Goa, India on 7-8th
September.
The
following is a brief report of the progress made by the Project during
the months of September and October 2001.
Phase-I
Country Report
During
the process of reviewing of Phase-I activities, it was felt that if
certain additional information could be incorporated in the Phase-I
country reports, the reports would become more comprehensive and
complete documents in themselves. For this purpose, specific
recommendations were made to the country researchers regarding the
additional information that could be included in their respective
country reports. This was done by the core researcher of the Project
as well as at CUTS.
The
country researchers collected this requisite information from the
Competition Authority as well as from other sources and are in the
process of incorporating this information in the country reports.
The
additional information that has been collected is also being used by
the core researcher of the Project for the purpose of revision of the
synthesis of the country reports prepared by him. This information
would facilitate comparative analysis of the country reports and the
data would then be put in the form of tables.
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Phase-II
Questionnaires
The
most important activity that was completed during this period was the
finalisation of questionnaires for the field survey to be done in
Phase II. The questionnaire is essentially an awareness survey among
the stakeholders and some in-depth survey of the Competition
Authority.
Preliminary
discussion on this questionnaire as well as on the action plan for
Phase-II was done at the Phase-I culmination meeting. The draft of
these documents was prepared at CUTS and was sent to the partners and
the Advisory Consultants Team of the Project for comments and
suggestions. These were then finalised and sent to the researchers and
partners for carrying out the field surveys.
The
field survey was begun and the partners were able to get a few
questionnaires filled up before the preliminary review meeting of the
Project which was held in Geneva on 12th October. More
questionnaires are being filled by the concerned stakeholders and
would be discussed at the 2nd NRG meeting of the project
countries to be organised in November. The country researchers would
also make a brief analysis of these questionnaires for their
respective country and a comparative analysis would then be made by
the core researcher of the Project.
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Preliminary
Mid Term Review Meeting
In
order to take stock of the progress made by the researchers on
Phase-II questionnaires and on revision of Phase-I country reports, a
mid term review meeting was organised on 12th October in
Geneva. The meeting was attended by the country researchers and
partners.
The
meeting helped the partners to discuss the problems they were facing
while conducting the field survey and also helped them to decide the
case studies they would take up during Phase-II of the Project.
Several important suggestions regarding completion of Phase-I and
proceeding ahead with Phase-II emerged at the meeting. These
suggestions have been considered and the work plan for the coming
months has been prepared accordingly.
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2nd
NRG Meeting
Phase-II
of the Project also involves organising of NRG meetings in the project
countries. Most of the project countries organised their NRG meeting
in the fist week of November, with the exception of South Africa,
India and Pakistan. South Africa NRG is decided to be held on 26th
November and India and Pakistan would organise it in the first week of
December.
The
meeting was held on 31st October in Kenya, on 2nd
November in Sri Lanka and on 8th November in Lusaka. The
NRG meetings discussed the Phase-I country reports, Phase-II
questionnaires and the three case studies to be taken up during
Phase-II of the Project. The meetings were able to decide the third
case study, which was left open in the action plan for the country
partners to decide in consensus with the members of the NRG. These
meetings were also attended by the CUTS staff.
The
meetings were quite successful and reports of the proceedings would be
sent by the partners soon. A particular format for preparing the
reports of these NRG meetings was sent to partners and researchers for
ensuring uniformity in the reports.
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Good
for Gates, not for consumers
Microsoft
has walked away from its dust-up with the US Department of Justice
(DOJ) relatively unscathed. The US Attorney-General, Mr. John Ashcroft,
has described the settlement of the three year anti-trust case against
the software titan as a “historical settlement” that would bring
“effective relief to the market and ensure that consumers will have
more choices in meeting their computer needs.”
And
the Microsoft boss, Mr. Bill Gates, has said that the settlement is
“fair and reasonable and, most important is in the best interests of
consumers and the economy.” He has added, somewhat snidely: “We
recognise that the success of our products has created concerns.
This settlement addresses those concerns in a fair and reasonable
manner, while still enabling Microsoft to continue innovating and
pushing technology forward.” The question is: The settlement
may be good for the beleaguered US economy – but would you describe
it as “in the best interests of consumers” if you aren’t Mr.
Bill Gates.
The
answer, in balance, is no.
In
order to understand why the settlement is not significantly in
alignment with consumer interests, we’ll have to back-track a bit
and list the issues involved in the DoJ’s case against Microsoft.
Basically,
the department’s contention was that Microsoft had used its
domination of the operating systems market to keep competition out.
It did this in various ways. For instance, it licensed its OS at
reduced rates to leading computer manufacturers, including Dell and
Compaq, on the condition that they exclusively installed MS software.
The
Redmond outfit wasn’t very delicate in its arm-twisting either.
As IBM would tell you, the Big Blue lost several million dollars
in sales when it declined to stop the sale of its own OS and software
packages – and Microsoft withheld critical details relating to
Windows 95....till 15 minutes prior to launch!
And
then again, in addition to giving away its Internet Explorer free,
Microsoft ‘bundled’ the browser into its Windows, leaving
manufacturers without any choice but to pre-load it. Those who
preferred to use Navigator were given a bad time with IE being
triggered automatically as the default browser for a variety of
functions.
Under
the settlement, the cornerstone of the DOJ’s case against Microsoft
remains intact: it does not prevent Microsoft from tying software like
its browser, e-mail client and media player with its OS. This is
the bad news for consumers.
What
the settlement does require, however, is that Microsoft provide
software developers with APIs used by its middleware to inter-operate
with its operating systems, allowing developers to make competing
products that can run on the integrated functions that Microsoft
builds into its own middleware.
The
above, of course, is not the only positive feature of the settlement.
The other good features include:
-
A
prohibition against retaliatory action by Microsoft against PC
manufacturers and software publishers who develop competing
software;
-
A
requirement that Microsoft licence its operating systems to PC
manufacturers on uniform terms for five years.
-
A
ban on the company from entering into exclusive agreements; and
-
The
creation of a panel of three independent monitors who will work
on-site at Microsoft to oversee its conduct.
And
that, as industry observers have observed, is about the best that can
be expected of the Bush Administration, which is known to be more
pro-business than the preceding one.
(Pratap
Ravindran; Business Line, 03.11.01)
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EU
Busts Vitamin Companies’ Cartel
The
European Commission fined eight chemical and pharmaceutical companies
a record-setting 855.2 million euros ($755.1 million) in a vitamin
price-fixing scheme that lasted nearly a decade.
The
largest fine was given to Roche Holding’s F Hoffmann-La Roche, which
was seen as the “prime mover and main beneficiary” of the
price-fixing scheme, the European Union’s ruling body has said.
Germany’s BASF received the second-largest fine of 296.2 million
euros.
The Commission said that a striking feature of the infringements was
the central role played by Roche and BASF, the two main vitamin
producers, in virtually each and every cartel, while other players
were involved in only a limited number of vitamin products. Both Roche
and BASF said they may appeal the hefty fines levied against their
companies.
In a statement, Roche said it has “fully cooperated with the
Commission since these practices came to light”. Such efforts
include its implementation of a special corporate training programme
to “reinforce its commitment to conducting business in full
compliance with all local and international laws”, as well as a
special monitoring team in its corporate internal audit department.
Roche also said its fine is covered by provisions made in 1999.
BASF, meanwhile, called the fine “inappropriately high” and said
it plans to closely examine the reasons behind the penalty decision.
The company said it will decide within two months whether to appeal.
Other
companies fined by the EC included Japan’s Daichii Pharmaceutical
(23.4 million euros), Takeda Chemical Industries (37.1 million euros)
and Eisai Co (13.2 million euros), as well as Germany’s Merck (9.2
million euros), France’s Aventis (5 million euros) and Belgium’s
Solvay (9.1 million euros).
“This
is the most damaging series of cartels the Commission has ever
investigated due to the sheer range of vitamins covered which are
found in a multitude of products from cereals, biscuits and drinks to
animal feed, pharmaceuticals and cosmetics,” EU competition
commissioner Mario Monti said in a prepared statement. “The
companies’ collusive behaviour enabled them to charge higher prices
than if the full forces of competition had been at play, damaging
consumers and allowing the companies to pocket illicit profits,” he
said.
The US justice department was the first to crack the worldwide vitamin
cartel, levying a $500-million fine against Roche in 1999, the largest
ever in a criminal prosecution of any kind. BASF paid a $225-million
fine in the case. Other companies fined in the US case included Merck,
Takeda, Eisai and Daiichi. Following the opening of the EU probe in
May 1999, the EC said it found that 13 European and non-European
companies participated in cartels aimed at eliminating competition.
(The
Economic Times, 23.11.01)
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CUTS
Centre for International Trade, Economics & Environment organised
a two-day expert level meeting on “Competition Policy and Consumer
Interest in Global Economy”, in Geneva, on 12-13th
October, with the support of International Development Research
Centre, Canada.
The
purpose of the meeting was to conduct a dialogue among various
stakeholders on the issue of competition policy. Representatives of
the Government, industry, NGOs and academia from different parts of
the world participated in the meeting. A brief report available on http://cuts-international.org/press-oct-nov01.htm#cartels
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Panel
Discussion on “Trade and Competition Policy”, 12th
November 2001, Doha
Consumers
International and CUTS Centre for International Trade, Economics &
Environment organised a panel discussion on “Trade and Competition
Policy” on 12th November in Doha, on the sidelines of the
4th WTO Ministerial Conference.
The
purpose of this meeting was to discuss and debate the interaction
between trade and competition policy including the desirability of a
separate agreement or arrangement on competition within the
multilateral trading system under the WTO, to tackle the growing
cross-border competition abuses in the era of globalisation. A brief
report available on
http://cuts-international.org/press-oct-nov01.htm#Consumers
would competition
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‘Investment
for Development’ Launch Meeting, 13-14 December 2001, Jaipur, India
CUTS
Centre for International Trade, Economics & Environment is
conducting a two year research and advocacy project titled
“Investment for Development” to create awareness and build
capacity on investment regimes and international investment issues in
selected developing and transition economies. The Project is being
supported by the Department for International Development (DFID), UK.
The countries selected for the Project are: India, Bangladesh, Brazil,
Hungary, South Africa, Tanzania and Zambia.
The
Launch Meeting of the Project will be held in Jaipur, India on 13-14
December 2001.
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Mid-term
Review Meeting of the 7-Up Project, 16th December 2001,
Jaipur, India
The
mid term review meeting of the 7-Up Project will be held on 16th
December 2001 in Jaipur, India. This meeting of the Project partners
and researchers would help to get a closer look at the progress of the
work in the context of Phase II of the Project and the first phase of
the Project would be completely over with this meeting. |
